Public Bill Committee

[Mr David Amess in the Chair]
Written evidence to be reported to the House
HGV01 Freight Transport Association
HGV02 Marc Billiet, International Road Transport Union

Examination of Witnesses

Professor Stephen Glaister and Dr John Walker gave evidence.

Q 7676

David Amess: I apologise for the delay. We had a dilemma because four members of the Committee—including me—make up half the Backbench Business Committee, which is meeting at 3 pm, but we have sorted that out so that that Committee will also have a quorum. I apologise for the delay, but we are now being broadcast.
Welcome to our two witnesses, who are representatives of the RAC Foundation and the John Walker Consultancy. Gentlemen, I do not know whether you have ever been put in this position, but I promise you that it is not an ordeal. These are nice people who are simply trying to gather evidence for when we start considering the Bill proper on Thursday. Starting with Professor Glaister, please would you both kindly introduce yourselves and make a few remarks on your perceptions of the measure?

Professor Glaister:  Thank you, Chairman. My name is Stephen Glaister. I am director of the RAC Foundation, which is a small independent research body that specialises in transport.
I will make one or two observations about the policy, if I may. At the RAC Foundation, we are entirely in favour of relating charges to costs, and we have a long tradition of publishing material to that effect. The Bill is a move in that direction, and to that extent we absolutely welcome it. I am sure John Walker will tell you about the technology and his views about the extent to which that will not work, but my view is that there is no technical problem and that it will work, whatever is decided.
Having said that, I have one or two reservations about what I have seen of the Bill. The intention, as I understand it, is to even up the situation where our hauliers pay tolls on the continent but not vice versa, which I understand. However, a future Government may move in the direction of charging tolls on our roads, and indeed the present Government have a proposal to do so on the A14, as you know.
I know that there are arrangements for exempting particular schemes, but I am concerned to ensure that the legislation does not cause any unintended obstacle towards a wider use of user charging on our road network. Ultimately, the legislation may become redundant because there is a more comprehensive charging scheme.
I have a concern that this legislation might turn out to involve quite a lot of administrative effort for little effect, although it is a step in the right direction. The explanatory note records that the scheme will not make much difference to the volume of foreign traffic—about 3% is mentioned—and, therefore, it will not help a great deal with road maintenance costs.
The estimated revenues are about £20 million, which is a tiny amount compared with the total transport tax revenues. It is about one twentieth of 1% of all tax revenues, and a fifth of 1% of what is spent on roads. So the scheme does not produce a great deal of revenue and it does not change traffic very much. It would make more sense to us if the revenue were to be used explicitly for maintaining the roads that are damaged by foreign lorries—in other words, if it were ring-fenced for that purpose—but I know that that is not the intention. It would be more logical if it that were the case.
One other thing I miss in what I have read is that there is no consideration of the compliance costs to foreign hauliers. There is consideration of compliance costs to domestic hauliers, but the measure will cause costs to people who want to import goods into this country, and that has not been considered, in my reading of the legislation.

David Amess: Thank you. Dr John Walker is here, presumably not to talk about whisky, but about quite a different measure.

Dr Walker:  Yes, unfortunately. I should say that I used to work for a supplier of equipment in the road user charging field. I retired a couple of years ago from that company, but I am still active in that I am a visiting senior research fellow in the Transportation Research Group at Southampton university, and I am the honorary secretary of the road user charging interest group of Intelligent Transport Systems UK, although I am speaking purely in a personal capacity. I also wrote a report for the RAC Foundation, which was published a year and a half ago, on the acceptability of road pricing, which went a lot wider than this initiative.
As far as this initiative is concerned, to me—this is not the general view of the industry, I have to say—it seems to be a well conceived and practical scheme, using the number plate as a vignette and identifying vehicles electronically. It seems to be a sensible way to start. There was a scheme initiated some years ago under a previous Government, which became extremely complex and would have been, as it turned out, a lot more expensive to implement than the revenues it would have brought in. This seems to me to be a sensible way to start. It is a small step, but a step in the right direction. There are a number of schemes in Europe using more elaborate technology in half a dozen countries with another few countries likely to follow, and I think we will end up doing the same in the future.
This is quite a low-technology scheme, but the technology could be used more widely, in my opinion. It is the same as is used for congestion charging in London and Stockholm. One idea I wanted to put forward is that the scheme should be studied carefully as a potential pilot for national road pricing. I know that is not Government policy at the moment.
I know that, as I mentioned in my statement, there were 1.8 million signatures against national road pricing on a previous Prime Minister’s website, and there have been negative referendums in Manchester and Edinburgh, but when you look beneath the superficial figures there is a great deal of evidence that road pricing is acceptable to the public as a whole, up to about 75%. That is evidence from the UK, Sweden, Norway and the United States. This scheme is a small step in the right direction, but I would also like us to learn wider lessons for the future.

David Amess: Thank you very much indeed.

Q 77

Jim Fitzpatrick: Gentlemen, thank you very much for your comments, especially those about wider road-charging issues. We touched on them previously and I am sure we will come back to them in Committee.
There was a disagreement this morning about enforcement procedures—automatic number plate recognition cameras versus visible discs on windscreens, which are apparently employed in most other European countries. Would you care to comment on whether you think discs would be necessary, or indeed better than or a complement to ANPR cameras?
Professor Glaister, your last point was about the compliance cost to foreign companies. Why are you concerned about that? Is it because the cost would deter them from complying with the scheme, or is it simply because of those business costs?

Professor Glaister:  It is the latter. It a broader point that you will inevitably increase the costs to the UK consumer of imported goods—I do not know how much by—because you are putting additional burdens on people when importing those goods. I think it would be wrong to regard the compliance cost as a good thing, because it is a slightly protectionist measure—against the spirit of free trade. That was simply my point.

Q 78

Kwasi Kwarteng: You mention free trade, but there is an imbalance between the domestic haulage companies and the foreign ones. On the basis of free trade, you want to have an equal playing field. It does not make sense to have free trade where one side has some costs and the other does not.

Professor Glaister:  I absolutely accept that. My point was that in the appraisals that have been done in the official documents, attention was given to the compliance costs for domestic hauliers. There is no mention of the compliance costs for other people. You may wish to dismiss that, but I think that the sums ought to be done to make sure it is not going to be a big burden, because it will damage UK consumers.
I am sorry that I did not address your first point, Mr Fitzpatrick, but perhaps I will leave that to John, who is more expert.

Dr Walker:  It is not something I have given a lot of thought to, but one of the issues is: who is doing the enforcement? The impression I got this morning was that the hauliers themselves would like to know if a foreign haulier is legitimate. However, they are not the people doing the enforcement. If the Vehicle and Operator Services Agency is using number plate recognition and that is working, it is the body doing the enforcement. Singapore has had a congestion charging scheme for about 30 to 35 years—maybe longer. It used coloured paper discs to start with, but dropped them 15 or 20 years ago because the system was too complex, labour-intensive and inefficient. Without having studied it, that does not sound like a good idea, and number plate recognition seems a much better scheme.

Professor Glaister:  The experience is—John will confirm this—that automatic number plate recognition has matured enormously, and it is now cheap and very effective. When I was involved with the London congestion charge scheme, we were a bit concerned about the risks of people doing things such as altering their plates, but it does not seem to have been a problem.

Q 79

Ian Mearns: I am always wary when people make international comparisons. As a member of the Education Committee, I know that the Secretary of State for Education loves comparing us with Singapore. I have been there with the Education Committee, and it is a very different place. The island of Singapore is about 35 miles across, so you cannot really draw comparisons about the effectiveness of a particular scheme in such an enclosed situation, although I guess that you could compare that with congestion charging in London.
I take your point that number plate recognition has improved dramatically, and I should declare an interest, because a company in my constituency, Petards, in an expert on manufacturing such equipment and it has done a lot of design and development work on it. I think that we have to be careful when drawing international comparisons.

Dr Walker:  Point taken, but I think that this was about human perception of the discs. I do not think the size of the city or state is that significant.
Stephen mentioned number plates. When I was in the north of England a couple of weeks ago, the local police were having a big drive on checking number plates in the car park of a superstore. They were offering to fit non-removable screws so that number plates could not be stolen quite so easily, so it may be a little bit more of a problem than we think.

Q 80

Andrew Bridgen: I think I am correct that, under EU regulations, anti-congestion measures are compatible with the road user levy that we are looking to introduce. We already have a couple of anti-congestion measures in the UK—the M6 toll and the London congestion charge—and I presume that any other road tolls that are brought in would be compatible under EU law.
I am somewhat surprised, Professor Glaister, given that you represent the RAC, that you are not asking questions about the cost of foreign vehicles on our roads and the number of accidents that they are involved in. The cost to the UK economy is some £56 million a year, and in 20% of those accidents, the foreign haulier is not traced due to giving false details. Obviously, with the road user levy in position, it is going to be much harder for a foreign haulier to avoid giving the proper details, because they will be on record from when they had to pay the levy, and the records will match up with their number plates. I therefore would have thought you might be a little bit more enthusiastic about this.

Professor Glaister:  I have not seen that put forward as an argument in favour.

Q 81

Andrew Bridgen: But surely you can appreciate that having the steering wheel on the wrong side for our islands makes foreign lorries far more likely to be involved in an accident on UK roads, just as our vehicles are probably more likely to be involved in an accident on foreign roads.
I would not say that the measure discourages foreign hauliers, but it gives a level playing field for domestic hauliers to compete. We do not want our lorries flooded out by foreign vehicles taking work away from our domestic hauliers. That is the situation we have at the moment with the unfairness of the marketplace.

Professor Glaister:  I would not comment on that last point. I think we are all agreed that it is about a level playing field and letting people make their choices.
We are very concerned about road safety, and we often say so. If there is a strong case that foreign lorries are causing a problem, that should be dealt with under any regime, whether or not the lorry charging thing helps. If this is a way of dealing with that, so much the better for the scheme.

Q 82

Andrew Bridgen: I think you can appreciate that if they have had to pay a road user levy, if there is a risk to their operator’s licence and if someone is responsible, then if a number plate is involved in an accident and they have given false details, it is going to be much harder for them to avoid being involved in an insurance claim, because the details will be on VOSA’s records.

Professor Glaister:  Yes, I fully accept that.

Q 83

Michael Connarty: To set off down the road of looking at how this levy can be policed, as you are taking it not from a haulier’s point of view but from a traffic point of view, can you throw some light on a few things that puzzled me when I thought about this over the lunch break?
If someone comes into the country and does not know—or chooses to ignore the fact—that they have to pay a levy, how quickly would that have to be traced? Presumably they could make a journey in and out of the country before anyone stops them to check whether they have paid the levy. If they do not come very often—if they are not regular 52-week hauliers—it might be quite a time since they came in without paying the levy. Someone has to store that information, but who transmits it to the police? Do the police really have the manpower to stop vehicles and say, “The last time you were in, you did not pay your levy”? It sounds easy, but I am not sure that it is as easy as we anticipate. How could such potential problems be eradicated?

Professor Glaister:  That is always an issue for all the charging schemes all over the world—you must have good enforcement. It does cost serious resources to enforce properly. Obviously, as you indicated, there is no point in having a scheme if it is not properly enforced. I do not know whether either of us is expert on the detail, but I imagine that the authorities would put a lot of effort into catching—if I can use that word—vehicles as they left the port, as it were. You want to make sure they did actually have the licence. If your equipment is in order—if you have an ANPR system—you would know very quickly whether that vehicle had a valid permit. You might well record violations and not be able to enforce action until they had left the country, and then you have the issue that you referred to of having proper records.

Dr Walker:  May I add to that? When vehicles are coming off the ferry, for example, you have them in quite a tightly constrained area. That is an ideal place to get a good picture of the number plate. Of course, that has been done for a number of years for security reasons. There are actually a lot of ANPR cameras at ports already and there have been for quite a long time. My understanding is that foreign hauliers are supposed to register before they come into the country on an internet-based database, so their number plate will already be known before they come in to the country. Anyone who does not show up on the database is infringing.

Q 84

Michael Connarty: That leads me to conclude that what you need is a substantial beefing-up of the resources at the ports. It is not a question of being stopped on the motorway, in a motorway lay-by or in a truck stop; it really is about access and entry. You are really saying that you need a substantial increase in resources at the point of entry and exit.

Professor Glaister:  I think that your question is about whether the figures in the documentation about the costs of operation and initial investment are adequate for doing the job. I have no way of answering that, but something needs to be tested on that.

David Amess: Our last question in this session, which lasts until 2.30 pm, is from Mr Vickers.

Q 85

Martin Vickers: Moving on from the difficulties of enforcing, what about the penalties? May I have your observations on whether you think they represent a sufficient deterrent?

Dr Walker:  That is outside my expertise. They look reasonable to me, but I am not in the haulage industry.

Professor Glaister:  I am afraid that I cannot help you on that particular one either.

David Amess: I said it was the last question, but that was a very short exchange. If no other colleague wishes to ask a question, I thank you very much for your time, gentlemen. On behalf of the Committee, I wish you a happy Christmas.

Examination of Witnesses

James Hookham, Jack Semple and Jay Parmar gave evidence.

Q 86

David Amess: As colleagues know, the drinks people were not able to be with us this afternoon: Carlsberg. Gentlemen, I think you heard what I said to the previous witnesses. We do want you to enjoy the session. Would you kindly all introduce yourselves and comment on the Bill?

Jay Parmar:  Good afternoon. My name is Jay Parmar; I am legal and policy director of the British Vehicle Rental and Leasing Association. Our interest is largely around the number of vehicles our members own and manage in the UK. To give the Committee a perspective of the numbers that I am talking about, we estimate that one in every four trucks over 3.5 tonnes in the UK is owned by our members. When you look at the Bill and its context, we estimate that that is one in every three trucks that our members own and manage.

Q 87

David Amess: And your view of the piece of legislation?

Jay Parmar:  You have no doubt heard the evidence presented to the Committee about rebalancing the competitiveness of the UK companies. That is something that we very much welcome. If the objective behind the Bill is to ensure that foreign-registered trucks pay towards the use of UK road networks, that is something that we would fully support. However, we have some serious concerns about the drafting of the Bill and the impact it could have both financially and economically on our members, particularly around rebates and the exemptions and the grant that the scheme is proposed to implement. I am happy to expand on that as we go through. It is key that we implement the changes sensibly, equitably and fairly without impacting on UK operators.

James Hookham:  Good afternoon, my name is James Hookham. I am the managing director for policy and communications at the Freight Transport Association. FTA represents the transport interests of British industry by all modes. Significantly for the purposes of this Committee, our 14,000 members between them operate about 200,000 heavy goods vehicles, about half of which would be affected by the measures proposed in the Bill. FTA is supportive of the Bill for the clear benefits we see emerging from it. First, despite the reservations that have been expressed this morning and earlier we see it as levelling the playing field. This has been a consistent concern of our members over many years. Although it does not completely solve the problem we welcome this attempt. As one of our members might say, “Every little helps.”
There is a revenue benefit and were the Minister to offer our industry £80 million over four years we would certainly have good ideas as to how we could help him spend it. That is certainly relevant. More strategically, the Bill would enable the amount of non-UK traffic to become visible for the first time by requiring this weight range of vehicles to register and pay a levy. Suddenly there would be far greater visibility of foreign vehicles and what they do in this country. That is relevant for my fourth benefit because there are well expressed views in the European Commission about relaxing the current cabotage restrictions—there is concern about the threat that that poses to the British haulage industry—and the measures in the Bill would help to quantify the potential damage that that measure might bring about. Both at tactical and strategic level there are measures in the Bill which we support.

Jack Semple:  My name is Jack Semple. I am director of policy at the Road Haulage Association. We welcome the Bill very strongly. I would add very little to what we have already heard from James. It is a good example of the Government working with industry trade associations constructively to address a problem that has been around for a very long time and to address specific issues in detail and come up with a scheme that is acceptable both to the Government and to industry. In the context of some of the points that have been raised today, it is perhaps worth mentioning that the scheme is well established elsewhere in Europe. In terms of enforcement, a lot of the enforcement resource is already there, so the very welcome enforcement to this scheme will bolt on to an existing system and process.

Q 88

Jim Fitzpatrick: Thank you very much for being here this afternoon, gentlemen. It is good to see you and we welcome your comments. Can I ask about costs? We heard this morning from one of our witnesses that there would be a cost to their business. Mr Parmar, you mentioned that you had concerns about the impact of rebates. Can you say a little bit more about that and, collectively on the question of costs, about vehicle size and the impact on companies? In the FTA evidence, Mr Hookham, one of the questions you ask is, “How will holders of Reduced Pollution Certificates be compensated through replacement grants?” Could you tell us about that so that we can get a better feel for what the costs are and how you see some of the Bill’s minor negatives impacting? That is as opposed to the positives, which we welcome on both sides.

Jay Parmar:  It is very interesting around the rebates; we are almost in danger of taking a leap of faith. We will not see some of the details behind the proposals until the Finance Bill 2014. That is profound, because a reduced pollution certificate rebate is given to UK operators. It is not clear how that scheme will pan out when we see the Finance Bill. Will UK operators be fairly rebated, particularly around the RPC, which is the certificate that is given to UK operators that operate greener trucks in the UK?
There is some concern around the economic value. The commitment that the Department has given us is that, on existing vehicle excise duty reductions, operators holding the RPC will be given the same economic value. That is something that we very much welcome. However, the devil is in the detail, and when we look at the economic value, we want to ensure that UK operators are compensated to the same level. We know that there are some constraints around EU state aid rules as to what can be returned to UK operators, so we need to be careful about how that rebate is calculated, particularly with the de minimis rules that govern it.
The second area of our concern is largely around refunds. In clause 1, you have got the proposed methodology on how UK operators will be able to claim VED refunds, and how the new Bill will replace that. Currently, the legislation allows UK operators to claim all unused portions of their vehicle excise duty, but under the new rules they will be restricted. To give the Committee a feel for the figures, we have estimated that our members tend to dispose of around 20,000 trucks every year, so if we look at a typical fleet that is being disposed of being between band E, as proposed in the Bill, and band G, we believe that, under band E, with two months unused lorry road user fee available, the figure is around £1.06 million, and for band G it is £1.6 million. That is the amount that we would not be able to reclaim under the Bill, which would result in a loss of around £2.7 million each year to UK operators. That starts to give the scale of our concern.
We know that, within the VED minimums, the UK Government can go so far in reducing the amount that a lorry is charged. There has already been an announcement and, through the Department’s own calculations, 6% will be worse off under the proposal, but 2% will not be worse off by more than £50. We know that, in total, there is around £500,000 of extra cost that UK operators will have to pay under the Bill. When you look at the aggregate, you see that if we do not do this in a sensible manner, it could hurt UK operators.
On the RPC loss, to give the Committee a figure, that is around £3.7 million if we were to lose that grant—if it is not to the same economic value, that is the amount we estimate that we would lose. We certainly want written assurance from the Department that the grants scheme planned as replacement will be of the same economic value. Otherwise, that is a direct hit to UK operators, which is not the intent of the Bill as we understand it. Those points need to be managed carefully.

James Hookham:  You asked about reduced pollution certificates. For the benefit of the Committee, these were a very popular means of encouraging early take-up of newer-generation trucks—you heard earlier about Euro 5 trucks—with discounts in VED offered to operators that took up these variants before they had to. Generally, the RPC is valid for the entire lifetime of the truck and, over that lifetime, that amounts to a significant amount of money—several thousand pounds—in saved VED payments. Because of the need to maintain revenue neutrality, the continued existence of RPCs was brought into question by the measures in the Bill, and the Department postulated the possible ending of these arrangements so that minimum EU VED levels could be maintained. Our members regretted that but understood the necessity of doing it. We were reassured by statements made at the time and by provisions in the Bill that there would be some form of compensation. Our members are anxious to see that delivered, because the value of the reduced level of VED is factored into the asset or book value of the vehicle on the company’s balance sheet, and there would be a one-off hit to companies if that VED benefit were lost. So the measure has a financial cost. We are open-minded and willing to work with the Department on how that might be compensated, but it is a consequence, although perhaps a necessary one. We are open to how the Department proposes to remedy it.

Jack Semple:  If I may add to that, I think it is a very important issue. We have to take a certain amount on trust at this stage. Our understanding is that with the Bill we are working towards a situation where a large proportion of RPCs will be fully compensated. The Government have already announced separately that the RPCs for the newest trucks—the Euro 6 trucks—which operators will start to buy from about now, are time limited. There will be no more RPC payment beyond 2017, so the end of 2016 vehicle excise duty. An alternative scheme will therefore have to be created for those Euro 6 trucks, and the Government have recently confirmed that there will be an incentive.
There is no reason why other trucks cannot be included in a similar scheme, and there is a degree of trust with the Department that there will be substantial movement across. We have argued very strongly, for example, that Euro 5 and Euro 4 trucks, where there is a real technology change, should be included. We are mindful that the Government have effectively been signalling an end to the RPC scheme, and we have a lot of issues from other Departments around some of the older trucks. I think for the Bill we have an understanding that there will be a replacement scheme to the value of the RPC for most of the trucks that are on the road at the moment.

Q 89

Andrew Bridgen: I would like to declare an interest, in that the company of which I am a non-executive chairman is a member of the FTA, which I am sure Mr Hookham is very pleased about. Can I ask the panel who they think should be responsible for paying the levy and for any fine resulting from non-payment of the levy? Should it be the driver, the owner, the registered operator, a combination of those or all of those? I am particularly interested in Mr Parmar’s response about how his members will feel about being responsible for their clients’ misdemeanours, and how he thinks his members will handle that.

Jay Parmar:  I am happy to answer that. You are absolutely right; our members are the registered keepers but not necessarily the operators. They are not using the trucks; they are providing those trucks to members of organisations such as those of my colleagues on the panel. We have enjoyed a system where responsibilities that come with being the registered keepers include paying VED, which is something our members currently do as part of the regime. However, there are no provisions built into the Bill to protect the registered keeper or transfer liability like we do for traffic fines, parking fines or congestion charging fines. Those are already built in, and we can legally transfer liability on to the offender who caused them, which is part of the natural justice of most road traffic enforcement legislation in the UK. It is unfortunate that there are no provisions built into the Bill. We would certainly welcome discussions on provisions that could be built in to protect our members.

James Hookham:  For the UK, clearly the operator should be the liable party; it is the party that is held responsible for all other aspects of fleet operation. Ideally, that would be the case for non-UK operators as well. However, the visibility of operators to UK enforcement authorities at the moment is not what it could be, or what it will be in the future. Until such time as we have an EU-wide database of operators, with the ability to take enforcement action across borders, the driver will have to be held responsible for payment of the levy, as the driver is currently held responsible for all other aspects of the condition of the vehicle while in the UK.

Jack Semple:  James’s last point is a very important one. The enforcement here bolts on to what is now a well-established system. The arrangements here are no different from other offences, in terms of road haulage law, for example. There was some discussion earlier about penalties. The penalties are adequate, and there are certain other offences that the driver may be committing where much stronger penalties, including imprisonment, may be relevant. However, in terms of enforcement here, the system is well established and is understood well by most drivers coming to the UK. I would not see a big problem there.

Q 90

Andrew Bridgen: If you will indulge me, Mr Amess, would the panel then agree that, as the Bill has to introduce a road user levy under EU competition law—it cannot put the levy on to only foreign vehicles; it has to be for all vehicles—we therefore have to have an enforcement system that will be fit for UK-registered operators, and that those criteria will not necessarily be the same?

Jack Semple:  In terms of the UK fleet, an important point to make is that a rental or leasing company is already under some obligation to make reasonable checks that the company to which it is renting or leasing has a valid operating licence. The operator of the truck should be the point at which the buck ultimately stops in the UK.

Q 91

Michael Connarty: The assumption that anyone sitting around this table knows as much as you gentlemen, or even a little of what you know, about laws and enforcement is probably a false hope on your part. We are not all in the situation of being members of your association; we simply represent areas with industries that have quite a lot of haulage. Grangemouth is in my constituency; it has a large amount of haulage going out, with chemicals and petrochemicals, and also dry goods transport.
I am still trying to work out how this all works. We have heard that if a vehicle has to pay a fine, the driver will be stopped and asked to make a payment of some kind or in some way initiate a payment that would come from the user, or else the vehicle will be impounded. If the vehicle was leased by someone, not owned by them, what happens if the lease runs out while it is impounded? With a fixed lease, who is liable for picking up the payment to get the vehicle released? That is a new angle for me. It might be that the vehicle is being leased by a company that has a very short-term perspective. I do not know how you solve that problem. I hope that, through negotiations and discussion, the regulations will be such that the vehicle will not be impounded for such a long time if a former user of the vehicle decides to abandon road haulage and does not want to pay.

Jay Parmar:  If I may, Mr Amess, that is a very interesting question, particularly around how the asset owner protects their financial interest in the vehicle. It is easy for someone to rent a vehicle and then abandon it without paying fines and any other charges incurred. Most UK rental companies will have provisions in place to protect themselves, so that if their vehicle is abandoned, they can try to pursue any charges arising from that. However, that is not always the case. That is why there need to be sufficient provisions within the Bill to protect the asset owner. Where the vehicle is abandoned in the situation that you have outlined, the asset owner needs to be fully protected; they are the innocent party, they have done absolutely nothing wrong, they have not broken any laws. Therefore, from our perspective, the Bill should have sufficient provisions to protect them.
The whole issue around enforcement is a very interesting topic. Our concerns in our consultation response asked for the Department to be as aggressive as they can with the enforcement. We think that the £200 proposed is too low. We think that there could be an indirect incentive for someone to come into the UK, just pay a daily fee and, depending on how robustly the scheme is enforced, carry on using the UK roads without being detected. If they are detected, they may take an economic view that “Actually, if it’s less than 20 days, I’ll pay the fine, and it’s probably quids in for me.” If it goes beyond, they may take a chance.
The suggestion by the Department is that there is around £4.8 million being dedicated to enforcement—we do not think that is enough. We think that far more needs to be given to ensure that the system is robust. We need a clear deterrence message to be sent to foreign hauliers that they cannot simply come into the UK and get away with it, or by chance just pay the £200 fee as a quid pro quo—“it’s cheaper than paying for 40 days’ use in the UK.” So that needs to be looked at. Our suggestion is that a minimum fine should be at least around £1,000. That will send a very clear signal to anyone wishing to come into the UK that if they are caught, there is a high penalty for non-compliance.

James Hookham:  It might be useful to compare what happens in the scenario described for other enforcement issues. The introduction of graduated fixed penalties a few years ago resulted in exactly the same situation; clearly there is remedy for UK operators through the licensing system for recovery of fines and further enforcement action. VOSA introduced a system where operators without a written address in the UK upon which notice could be served, would have to pay a deposit to be able to discharge any unpaid fines. I am sure that comparable arrangements with the driver held liable would prevail here as well.
At the moment, through the graduated fixed penalties, VOSA are enforcing, with all respect, far more serious issues around the roadworthiness of the vehicles and the compliance of the driver with drivers hours provisions—a situation that seems to be operating satisfactorily, and VOSA report that they are able to find redress against offending foreign operators and drivers through that route. I am sure that could be adapted for the purposes of enforcing the road user levy.

Jack Semple:  To expand on James’s point, looking at different offences and the severity of the offences, a £200 fixed penalty is probably not far off right when you compare with what else is going on in terms of the fixed penalty scheme. We have recently, in the RHA, gone for a consultation with our members, and they are very concerned about drivers falsifying their driving records. That is a much more serious offence where we think a custodial sentence is appropriate. You have got to look at scales. On the other hand, in terms of defrauding HMRC, we have an issue where some operators use red diesel. We are urging the Treasury to report all such incidents to the UK regulator, for example, so that appropriate and proportionate sanctions can be taken.
In the sliding scale of things, £200 at the roadside and £5,000 on summary conviction is probably about right.

Q 92

Andrew Bridgen: Bearing in mind that this will have to apply to all vehicles on UK roads—including UK operators who are operating without a VED licence—if, for whatever reason, the roadside penalty is not paid and the vehicle has to be impounded, would it be reasonable that the road user levy should continue to accrue on top of the fine until the matter is sorted out?

Jay Parmar:  I think I would agree with that observation. We need to ensure that the regime is as penal as we can possibly make it, particularly with offenders, given your earlier comment about vehicles being abandoned; but perhaps there needs to be a cap as to how many days after the event the charge should stop. If it accrued continuously, if a large fee is being pursued, is there a likelihood of recovering that amount? We would certainly say that the charge should continue to accrue until the matter has been settled.

Q 93

Andrew Bridgen: It is only £10 a day. It is not a huge amount of money but it does keep the pressure on.

James Hookham:  There are fees, of course, for the release of vehicles from impounding and so on, which are significantly more than £10 a day, so I am sure the costs could be recovered.

Q 94

Julie Hilling: I want to go back to the point that Mr Parmar raised about one in four vehicles being rented.

Jay Parmar:  To clarify that point: it is one in four trucks on UK roads that are subject to an O licence are managed by our members. That is vehicles over 3.5 tonnes. It is one in three when you go to the weight at 12 tonnes.

Q 95

Julie Hilling: Okay. Do you know how many of the foreign trucks are on rental rather than owned by the operator?

Jay Parmar:  I think the pattern, because of the value of the asset, is that it is more likely than not that hauliers, whether in the UK or abroad, will look to some sort of leasing arrangement. It is the most effective way for some operators—rather than owning the asset, they are likely to lease or rent, if it is a temporary use into the UK.

Q 96

Julie Hilling: Do you see any difficulty with that arrangement in terms of levying penalties against a foreign operator?

Jay Parmar:  Going back to the earlier comment about enforcement, while our members are predominantly in the UK it is difficult for me to talk about foreign leasing and rental companies. I suspect they will have the same difficulties. If the haulier who is responsible for the charge fails to pay the fine, they would need to look at recovering their asset from the authorities, if it has been abandoned or, at least if the fine has not been settled, how they would make arrangements with the operator to ensure they are sufficiently indemnified.

Q 97

Julie Hilling: Do you have any suggestions on whether there should be some additional provisions?

Jay Parmar:  As I alluded to earlier, most UK road traffic offences already have built in the ability for a vehicle leasing or rental company to transfer liability on to the hirer. That is quite normal practice in most rental agreements. In lease agreements there are provisions that both parties undertake.
While our members are the registered keepers—and I guess it will be the same for foreign lessors—they will want to be able to transfer liability on to the party that has committed the offence. Again, we would simply say that provisions that are already reflected in other road traffic matters are built into the legislation, to give our members and perhaps other asset owners that comfort—that they are not going to be held to account for fines incurred by the operator, the haulier.

Q 98

Julie Hilling: May I just ask one more question, Mr Amess? Forgive me: I am not sure who it was, but somebody said earlier that they thought the enforcement resources were adequate and already in place. It felt like somebody else had contradicted that in something else that was said. Do you collectively believe that there are enough enforcement resources in place or do you think additional enforcement would be needed?

Jack Semple:  The point I sought to make in my opening remark is that the enforcement effort here will bolt on to an existing infrastructure. Whether VOSA is adequately resourced, and supported by other agencies, has been a matter of great concern to the RHA and its members for a number of years. Mr Fitzpatrick’s high-risk traffic initiative greatly increased the resource available to VOSA from 2008, and that has been continued to a significant degree after the initial three years ran out, for which we are grateful. We have repeatedly stressed to the Department and the Treasury the importance of adequately resourcing VOSA’s enforcement activities and maintaining that. We hope to discuss how best that can be spent and so on. But there is a great concern to ensure that there are adequate resources. Whether that should be included in the discussion about whether the net revenues go to the Consolidated Fund, road maintenance, VOSA or some other targeted specific issue is a separate discussion. The key point is to ensure that adequate resourcing for VOSA’s enforcement activity is maintained.

James Hookham:  On a general point, it is absolutely right that VOSA is the enforcing agency for this. Non-payment of a levy would probably indicate wider issues with a vehicle or operator. It would be very important that VOSA followed that up. You should also appreciate the value of the assets that VOSA has in its possession and the load as well. In terms of paying the levy that is due, that would be very small compared with the value of the asset that was impounded. When we talk about VOSA resources, I do not think it is meant that we just talk about human resources. VOSA now has some very sophisticated technology to match number plates to O licence records of British operators. The registration database that will need to be created to evidence payment of the levy will give, if it is constructed correctly, a very high degree of visibility of operators that are visiting this country. The ability to match registration plates to those records can be done in real time as vehicles pass under number plate recognition cameras and gantries on the motorway.
It would be easy to generate a daily list of vehicles that have entered the country and paid and vehicles that have entered the country and not paid, which could then be posted to ports of exit for enforcement action to be taken on specific vehicles. You would not have to stop a random sample of vehicles hoping that you would get lucky. You could, if you constructed it correctly, have some powerful, targeted enforcement activity. In conclusion, the fact, therefore, that word would get around that if you did not pay you were very likely to be caught would probably drive a high degree of payment and compliance with this. The risk of being caught, being impounded, being enforced and, more particularly, being delayed—you will not get paid unless you deliver your goods—will probably be a high deterrent against avoiding this levy.

Jay Parmar:  Just this thought on that last point. With the Government trying to do more with less, the fines could be hypothecated back into dedicated enforcement. It is important to ring-fence that. I guess there will be an annual discussion between VOSA, the Department for Transport and the Treasury as to how much enforcement budget will be allocated. It is important that that amount is ring-fenced to ensure future effective enforcement. That is certainly something the Committee should consider.

Q 99

Jim Fitzpatrick: Mr Hookham mentioned the word “visibility” in his first comments and I forgot to ask him about that. When I was asking earlier about the disc versus ANPR, clearly ANPR is acknowledged by most as being adequate for the task. When you say “visibility” you don’t mean ability to be seen but the ability of authorities to identify the volumes, the numbers and so on?

James Hookham:  Yes.

Q 100

Michael Connarty: My main question has been answered. It would appear that the focus on the point of access and entry is the key to good enforcement for vehicles coming in. So that was the main point of my first question. My second question is this. We heard quite a strong plea from one of our earlier witnesses for this to be the first part of a national scheme for road pricing. You mentioned the fact that there are cameras all over the motorways at this moment. I have to say that having spent two periods with the parliamentary police scheme and watched the goings-on on the cameras on the motorways in central Scotland, there was quite some difficulty determining the vehicle registration because it was muddy or the weather was terrible. Automatic recognition seemed to require human intervention to work out what a number plate actually said, so it may be not as easy as we assume, given our weather system. Is there a view of this as the beginning of a structure for road pricing, given that there are cameras on our motorways that could be used for foreign vehicles?

Jay Parmar:  We would not see the Bill as paving the way for national road pricing. We would certainly welcome a distance-based charging scheme as a far more equitable way of ensuring that the road user contributed to the environmental and social cost. As we have seen before, the cost of implementing such a scheme is quite tremendous—the infrastructure and the black boxes required in the vehicles—but it is the fairest way of ensuring that UK motorists pay towards the use of the roads.
We also understand what the deal is for the motorist. You heard earlier the evidence from the RAC, talking about £50 billion being paid towards motoring taxation. We need clarity on exactly how a future road pricing scheme is going to operate, and we need to have a much bigger debate on that. We need to understand how fuel duty would operate in that environment, and we need to understand what the vehicle excise duty is. So there are a number of factors. Motorists are already very hard pressed, and the additional charges—as you have heard, with petitions to No. 10—would not be welcomed.

Q 101

Andrew Bridgen: Could the panel help me clarify something that I think the Committee is slightly misunderstanding? It is almost as though these foreign vehicles are currently unregulated when they come into the UK, and suddenly we are going to ask VOSA to implement this levy when it has never seen a foreign vehicle before. When foreign vehicles are in this country, they are currently regulated by VOSA, and they are stopped regularly at the side of the road for vehicle inspections and drivers’ hours inspections. Information from VOSA suggests that foreign-registered vehicles are far more likely to have defects on the vehicle and be in breach of drivers’ hours regulations, and therefore they would be targeted by VOSA currently to try to get these potentially dangerous vehicles off the road. Does the panel agree with me that VOSA is very much involved with foreign lorries at the moment, and this is more of an administration exercise? As I say, VOSA may well already have databases set up on some of those foreign operators.

James Hookham:  Yes, I would agree with that statement. What happens to great effect for UK operators is that because they have an O licence, and the O licence database is accessible by VOSA for enforcement purposes, it is very easy to get the full story on the operator once you have identified one of his or her vehicles. An equivalent database does not yet exist in every other member state. I believe a recent EU regulation requires it to be established, and it is work in progress, but it does not actually exist yet such that VOSA can stop, say, a Dutch vehicle, access the registration database in the Netherlands and understand the background of the owner or operator of that vehicle. That will come, but until it does, VOSA is building up its knowledge of individual foreign operators simply as it stops their vehicles. VOSA’s picture builds as quickly as it can stop and enforce against the vehicles, rather than being given the total story from the licensing details and statistics.

Q 102

Andrew Bridgen: As I understand it, VOSA currently operates on a traffic light system. It looks at what has been wrong when it has stopped your vehicles previously and knows immediately what it should be looking at, whether it is tyres, vehicle maintenance or drivers’ hours, and it targets operators that have a poorer track record.

Jack Semple:  It is important that the enforcement of this levy will come as part of a continuing developing enforcement initiative by VOSA, which has been going on for some time but which really started to make progress three or four years ago. We have seen VOSA working very hard to create a climate where foreign operators have a better understanding of, and compliance with, the standards that we expect in this country.
There is some distance to go on that yet, but if I can pick up on one point, you were saying that VOSA regulates the foreign firms. It does not regulate, but it does enforce. There is a big difference in terms of regulation. For example, for an operator with a dirty number plate, VOSA will report to the regulator and that will go on the UK operator’s record. One of the problems—apart from the fact that we know less about foreign operators—is that we cannot actually take action against a foreign operator, so we cannot, for example, stop it coming into the country no matter, more or less, how many offences it commits.

Q 103

Andrew Bridgen: So you are saying that it will not count against the foreign operator’s good repute on his operator’s licence.

Jack Semple:  That is right. We cannot do that. It would be nice if a member state could say, “That operator is no longer acceptable in this country,” but we are not there yet. VOSA’s enforcement role is evolving in terms of foreign operators, and we are definitely making progress, but there is a lot more to be made and this will help.

Q 104

Andrew Bridgen: To follow up, if I may, what about operators coming into the UK from outside the EU? Is that going to be even harder to monitor?

James Hookham:  Yes, because the databases I was talking about emerged from an EU regulation, which clearly will not apply outside. It will have to be anecdotal evidence that is built up over time. The number of journeys made is quite significant and is a real issue. Clearly, the limits of the EU’s regulations and directives do not apply to those countries.

Jack Semple:  In essence, hauliers in the UK are very aware of the fact that the Bill—in addition to levelling the playing field and getting over the problem that foreign operators pay nothing at all to use our roads—will bring additional enforcement capability, which they welcome.

Q 105

Julie Hilling: To follow up on enforcement, do you think that this is likely to help with foreign operators that are believed to be flouting the rules on cabotage? Is this is going to be of assistance in that regard?

James Hookham:  Yes, I would imagine so, for the reasons I was saying earlier. The authorities here will have a record of the date of entry of the vehicle into the country, presumably when a levy was paid, and then a date of exit, by which you can judge whether the right levy is being paid at the right time. The current cabotage rules limit the number of domestic journeys that a visiting vehicle can make within the period of a week, so part of my earlier point about visibility is that, rather than enforce that case by case, by virtue of building the registration and payment database for the levy, you would also make visible the activities of foreign vehicles while in this country. Then you could target what may appear to be breaches of the cabotage requirements as they stand.

Jack Semple:  There should be some real benefits there. If you are counting them in and counting them out—to use a phrase from another context—that is going to create a lot of helpful information.

Q 106

Pamela Nash: Today, we are talking about levelling the playing field for hauliers here with colleagues across Europe. However, we have a capsule view here, looking at the effects in Ireland. Could you each share the experiences of your members in Northern Ireland, who are in direct competition with companies in southern Ireland? How will the levy affect such companies in practice? How can we implement a levy there? I know that you, Mr Hookham, expressed some concerns about that in your written evidence. If you could expand on that, it would be most helpful.

James Hookham:  Yes; the issue here is that this is the only land border with another EU member state that is affected. We do not have the benefit of a very small number of entry and exit points, and therefore the enforcement issues are more complex. Our experience, as you heard from witnesses this morning, is that many operators operate on a pay-in-Ireland basis. Fuel duties and other taxes are generally lower in the Republic than they are in the UK and therefore those advantages are exploited where possible. The degree to which the levy is enforced on the Northern Ireland-Irish border, given the larger number of roads and entry and exit points, is of a concern. We flagged it up because in the Bill, and in the supplementary notes, there are few details about how this special case will be treated. At this stage we see it as a complexity in the overall package, but we are willing to help and support the Department in trying to get this right, given the special circumstances that it is trying to address. But we are not blind to the fact that it is going to be different from continental traffic that comes into half a dozen principal ports on the east and south coasts.

Jack Semple:  If we are talking about a few roads that are going in and out along the border, I do not think many of us have any problem with that. But if we are talking about exempting roads that drive into the heart of Northern Ireland, I think we would welcome that only when we achieve fuel duty parity—

James Hookham:  Yes.

Jack Semple:  And not before.

Jay Parmar:  Our experience of talking to sister trade associations in other countries—Germany in particular—is that the unintended consequences could be that you divert traffic on to other roads. It is quite useful to understand how the enforceability would work, notwithstanding the points made earlier.
Within the consultation, it is interesting that there is an assumption of 100% compliance. The £20 million raised annually is based on the assumption of full compliance, but we know that that will not be the case; otherwise, there would not be an enforcement budget. The Committee needs to look carefully at that.

Q 107

Pamela Nash: If we find the perfect system that has 100% compliance in Ireland, how will that affect your members and businesses in Northern Ireland?

James Hookham:  I think it will help, but it will not level the playing field. The difference in taxation and fuel duty for the Republic are not such that this £4 a day will close it off completely, but clearly it will contribute. Of course, you have the option of relocating vehicles out of Northern Ireland and into the Republic if the advantages are such that it is in your interests to do so, and it is much easier to do that across that border than it is to do that across the English channel.

Jay Parmar:  What the consultation analysis has failed to look at is behavioural change. How will foreign hauliers adapt to this new charge? Will they look at different weights, such as changing to coming in at below 12 tonnes to avoid the charge? I do not think that has been fully analysed.
We believe that there will be hauliers that will look to change their behaviour, and how long they spend in the UK, coming in and out, will inevitably change, but I do not think the consultation has fully analysed any behavioural changes. Will we see lighter trucks coming into the UK, and will that be an economic way to come? We do not know, so that needs to be looked at very carefully.

Q 108

Andrew Bridgen: Could the panel give their view on the merits, or otherwise, of possibly extending the scope of the Bill to cover PSVs, such as coaches?

James Hookham:  I am no expert in passenger transport, so my first question would be whether coaches exceed 12 tonnes and, therefore, would the Bill apply to them? On that point, listening to witnesses and questions this morning, the 12-tonne threshold emerges from the European directive requirements for the Eurovignette. It is not a threshold that we commonly use in the UK—as you have heard, our thresholds are 7.5 tonnes and 18 tonnes—so the 12-tonne vehicle does not exist as such in the UK; it is not something we have used. My suspicion—it is only a suspicion—is that, to make it effective for passenger vehicles, you might have to reduce the weight threshold substantially. That would have to be governed, ultimately, by what the directive allows you to do.

Jay Parmar:  Notwithstanding the remark made, our concerns would be an impact to the UK economy by bringing passengers’ vehicles from abroad into the UK and we need to think about the free trade impact. We are not quite clear whether bringing in passenger vehicles would be sensible. We think the focus is specifically targeted at heavy goods. That is the area that we are trying to rebalance and create a level playing field for and I think the Committee’s focus should be on that particular segment, not others.

Jack Semple:  I have not got a lot to add, only to reiterate to a degree what James was saying, our concern was with the top rate vehicles: five and six-axled articulated lorries and drawbars. We are one of the very few countries in the EU that does not have a charging system of some sort. As I say, the Eurovignette system is well developed and well used in near countries in the EU.

Q 109

David Amess: Were there any other questions from colleagues or are we all done? That being the case, thank you very much indeed for the evidence you have given the Committee this afternoon and on behalf of the Committee I wish the three of you a very happy Christmas.
Now we move on to our final session with the Minister and officials. I am mindful that there is due to be a vote, but I do not have the power to adjourn the Committee now. When the Division comes, we will adjourn for 15 minutes.

Examination of Witnesses

Neil Barlow, Simon Chapman, Karen Farr, Stephen Hammond MP and Mark Wilkinson gave evidence.

Q 110

David Amess: May I formally welcome our Minister? I have no doubt at all that colleagues will be nice to the Minister on the basis that he is nice to colleagues’ constituents. Minister, may I leave you please to introduce your colleagues and perhaps to make some opening remarks about this piece of legislation?

Stephen Hammond:  Thank you very much, Mr Amess. I will ask my colleagues from both the Department for Transport and VOSA to introduce themselves in a moment. I hope that, should we get into the bounds of any really technical questions, they may be able to clarify things for the Committee. However, I hope I will be able to answer most of the questions that the Committee puts to us this afternoon.
As was discussed both at the Ways and Means debate and indeed on Second Reading, the primary purpose behind it is, to use the phrase, to level the playing field between UK hauliers and foreign hauliers. It is well known that UK hauliers suffer a penalty because of a levy when they go to the Continent and the intention of this Bill is to move some way to redress that difference.
I am delighted to say that the Bill has been widely recognised and welcomed by both the Opposition and many elements of industry, as we have heard today. Notwithstanding that, some questions have been brought out in the evidence sessions and I would be delighted to try and answer any questions the Committee has this afternoon.

Q 111

David Amess: Thank you very much indeed. Could you please introduce yourselves?

Karen Farr:  My name is Karen Farr. I am Enforcement Policy Development Manager at VOSA.

Neil Barlow:  I am Neil Barlow, also from VOSA. I am Head of Enforcement Policy for VOSA so responsible for the details of everything that our examiners do in terms of enforcement.

Simon Chapman:  My name is Simon Chapman. I am working in the Department for Transport in the Roads Strategy and Charging Team and very much involved in the levy implementation.

Mark Wilkinson:  I am Mark Wilkinson and I am from the general counsel’s office at the Department for Transport. I am the legal adviser for the Minister on this Bill.

Q 112

Jim Fitzpatrick: Minister, we have listened to a number of witnesses, the vast majority of whom have been constructive and supportive of the legislation, although some raised questions and sought pause for thought and additional clarification. Has that made you think that you need to tweak the Bill in different ways, or are you confident that, as it stands, it will not need to be amended at this stage before it goes to the other place?

Stephen Hammond:  I have listened to a number of the questions today. In two of them we hit the wrong target. Specifically, I should like to go through in detail for the Committee some of the enforcement arrangements. Mr Connarty asked a number of questions as to exactly how the fine would work. In particular, I should like to go through that because there are three different scenarios—UK, foreign drivers where we know the address and foreign drivers where we do not know the address.
I have listened carefully to some of the issues about cost, particularly relating to reduced pollution certificates. I know the response from the Department and I will be going back to look at it. There have been a number of other matters raised. Mr Bridgen in particular has brought up some issues around liability for the levy and liability for the offence. I want to clarify that in my evidence this afternoon. Otherwise, I hope that in, the next ten minutes or so of questioning—I am sure you will want to be short, Mr Fitzpatrick—I will be able to clarify other matters for you.

Q 113

Jim Fitzpatrick: Can I ask for a few words on the questions raised about the Irish border and what goes on there? Some of the witnesses were very concerned but it was not entirely clear what was going to happen.

Stephen Hammond:  I hope you heard what I said this morning to the gentleman from DHL. I made the point that the Irish Government wrote to us asking for an exemption for Northern Ireland. Their contention was that they already paid some of the moneys to Northern Ireland for road maintenance. They are, of course, heavy users of that road. I made the point that there is already tolling on the major southern Irish roads so that when this levy is put in place, the charges for the round trip would broadly be the same. We are having discussions with the Irish Government concerning some of those rural roads that weave across the border where it may be possible to look at an exemption. Otherwise we do not intend to have a general exemption for Northern Ireland.

Q 114

Andrew Bridgen: I thank the Minister for that. For the removal of doubt, could he explain to the Committee who he will expect to be responsible, as the result of this Bill, for the paying of the levy and any subsequent fines or costs for the non-payment of the levy?

Stephen Hammond:  The Bill makes it clear that both the registered owner and the operator of the vehicle are liable to pay the levy. For UK-registered vehicles, the owner is liable by virtue of clause 4(1)(a) of the Bill. The operator is liable by virtue of clause 4(1)(b), which provides that anyone keeping a vehicle is liable. For foreign-registered vehicles the Community licence holder is liable by virtue of clause 4(2)(a) and the person keeping the vehicle is liable under clause 4(2)(b). Clause 4(3) provides that where there are two or more people liable to pay the levy, they are jointly and severally liable, so both the registered owner and the operator would be liable. In terms of liability for payment for the offence, clause 11(1)(a) makes it clear that the driver of the vehicle is liable for the offence and any fines. Clause 11(1)(b) makes the registered owner and the operator—that is, the keeper of the vehicle—liable for the offence and any fines.

Andrew Bridgen: I think that is called belt and braces, Mr Amess.

Q 115

Pat Glass: I do not have any previous knowledge of HGVs, so forgive me if I am asking stupid questions. I want to explore what I think are possible unintended consequences of the Bill. I understand that, in Europe, different countries have different systems: some have tolling, some have Eurovignettes. Have you looked at the possibility of the countries that do not have levies taking retaliation, which might make things worse for our HGV drivers?

Stephen Hammond:  Having taken legal advice, we are entirely clear that the Bill is compliant with EU legislation and that, therefore, the prospect of retaliatory action is minimal.

Q 116

Pat Glass: As I understand it, a possible impact may occur if you combine the levy with the vehicle excise duty. Under that duty, if you have a more efficient, smaller and greener engine you pay less duty. Is there a possibility that this measure could work against hauliers buying cleaner engines?

Stephen Hammond:  As I understand it—and, as I said to Mr Fitzpatrick, I will be going back to look at the reduced pollution certificates—a lot of the older reduced pollution certificates were against pre-Euro 5 vehicles. Holders of those certificates could not receive the new grant, anyway, for more than 55 to 60 vehicles. That is the number because the pre-Euro 5 vehicles would receive the grant under the de minimis rules. The reduced pollution certificate grant will be available for vehicles with RPCs and it is our intention to ensure that they are set at the same value as the current VED discount.

Q 117

Pat Glass: I am not entirely sure I understood much of that, Minister. What you are saying is that you have looked at this issue and you do not have a concern about it.

Stephen Hammond:  What I am saying is that it is the intention that we set the grant from the reduced pollution certificate in line with the vehicle excise duty levy, so that the two should match up. As I have said, I am going to go back for assurance on that point.

Q 118

Michael Connarty: The Minister did prove that he could read—I was reading the same sentence as him when he was repeating who would be responsible for the offence. In clause 11, the
“person who uses a heavy goods vehicle on a road”
is obviously the driver, in the same way as if I am driving someone else’s vehicle and I speed, I am liable for the fine. However, if the vehicle has not had levy paid for it in the past, and is therefore liable for a fine—in other words, is not caught going out of the country, or stopped coming back into the country, but then is stopped at some other time—the driver would be liable for the fine, because the driver is the person who is liable. It is easy to see, with a UK vehicle, if it has a disc, but it is not easy to identify that a vehicle has paid the levy if it does not carry a vignette or a disc of some kind. If there is an outstanding unpaid levy, and there is therefore liability for a fine, are you really saying that the driver for journey two, who may have paid on the way in, is liable for the outstanding fine for a previous breach? That cannot possibly be just, because it is criminalising the driver, who might have paid on the second entry, when the fine is outstanding for a previous, different journey.

Stephen Hammond:  That is possible. It is also possible that it was that driver who failed to pay the fine on a previous occasion.

Q 119

Michael Connarty: Let us just assume that it is not, Minister, because I am talking about innocent people here, not guilty ones.

Stephen Hammond:  We have to be very clear about making sure that this measure is enforced. The most obvious person we can enforce it against is the driver. The reality is that we will be using information both about payment of the levy and about people who have not paid the levy, and that if someone has not paid the levy, the driver is liable for that fine.

Q 120

Michael Connarty: Let me press this, because I do not think that your assumption is necessarily correct. I would not want to drag up again the case of the former Minister and his wife, and who was driving the vehicle; we discussed that at length in this House. The issue is, if the person who was driving the vehicle previously is not the same as the driver when the vehicle comes back into the UK on journey two, and the driver for journey two has paid the levy for their journey but there is an outstanding fine on the vehicle, it must surely be the owner of the vehicle—the person or persons set out in clause 4—who is liable for the fine. Any imposition on that particular driver—even if it was to hold or impound the vehicle, when that driver has been instructed to deliver the vehicle’s cargo, and was hoping to be paid for doing so—would be a terrible imposition on that individual. Nothing that I have heard so far has clarified that an innocent driver could not be fined for a previous driver’s failure to pay the levy. Therefore the owner or the registered user must surely be the person who is held responsible.

Stephen Hammond:  By the very act of driving that lorry on the day, an offence is being committed, because you are driving a lorry for which the levy has not been paid previously. It is therefore perfectly acceptable to enforce the sanction against the driver of that lorry.

Q 121

Michael Connarty: I am sorry, but we are going to fall out about this, because I think that that is a terrible imposition on a possibly innocent person.

Sitting suspended for a Division in the House.

On resuming—

David Amess: I have counted and we are quorate. The exchange was between Mr Connarty and the Minister. Mr Fitzpatrick, did you want to step into your colleague’s place?

Q 122

Jim Fitzpatrick: Mr Connarty was making an interesting point. He described a vehicle that had been identified as being in deficit, having not paid a previous fine, arriving at the border again. That places the enforcement authorities in a quandary because it could be a different driver working for the same company and that person could be held responsible. Mr Connarty was questioning the fairness of that, Chairman, and the Minister was in the middle of responding to that quandary.

Stephen Hammond:  Yes. The quandary exists over who we can take action against to ensure that. It is a fairly specialised case because we know that this vehicle has come back into the UK having not paid the levy before. That is quite a different case from coming into the UK and not paying the levy on that day. It is quite a different case from driving it around the UK for several days and then being caught on the way out and not paying the levy. In both those situations, the driver would be liable.
It was a fairly specific case that Mr Connarty cited of the lorry coming back without having paid. While, if it did not pay on that day, we would take action against the driver, it appears that we would look principally to take action, as I said in my first remarks, against either the owner or the operator for the back offences. However, it is one specific case. In the more likely situation that a foreign lorry comes in, fails to pay the levy, is not caught at the port, drives around and then is caught on the way out, at that stage the driver would be liable.

Q 123

Marcus Jones: In relation to enforcement, many witnesses, particularly this morning, mentioned impounding vehicles as probably the best way to secure any recourse for the UK taxpayer. How is that going to work and will that be a tool in the armoury that can be used to secure the position in trying to enforce these issues?

Stephen Hammond:  Mr Hookham made a very good point. I may ask my colleagues from BIS to come in on that point. You should not see the provisions of the Bill and what VOSA is doing to enforce this as not being able to run alongside all its other activities. It is highly likely that when a lorry is stopped, VOSA will be looking for more serious aspects such as roadworthiness, and it may well be that that is what triggers the impounding of the vehicle. It would be unsurprising if that did not happen.
As to your specific point, this would really revolve around a foreign vehicle where the driver does not have a satisfactory UK address. They would be asked to pay a deposit that would be set against the fine. If they were unable to pay that, the VOSA officer may choose either to immobilise or to remove the vehicle. Equally, in the period of time between the payment of the penalty notice or the deposit and the paying of the levy, VOSA will immobilise the vehicle at that stage as well.

Q 124

David Amess: Did any of the officials want to come in on this question?

Neil Barlow:  No, I think that that covers it. That is routinely what we do at the moment. When we find things, we immobilise vehicles until penalties are paid. The one additional element is that we do so also until the levy is paid. It is business as usual for us at the moment.

Q 125

Stephen Doughty: I was a little perturbed, and you appeared to be as well, Minister, when one of the witnesses suggested that they knew where VOSA always did its checks, and that certain areas were known to be ones to avoid. I was just wondering if you could reassure us, without revealing any state secrets, of the robustness and geographical diversity of VOSA’s operations, particularly in light of the important new levy, which will have to be enforced.

Stephen Hammond:  Thank you, Mr Doughty, and I welcome you to your role in the House. I was perturbed by that remark this morning, and I have been able to speak to officials subsequently. I am convinced that with the arrangements that we are putting in place at ports, the extra moneys the Government are making available for VOSA on top of what is already available for enforcement activities, plus the standard law enforcement activities and the geographic range of what VOSA does, there is integrity in VOSA. I am convinced that its systems are resilient and strong. If there is any suggestion that we can do anything about what the witness said this morning, you can be sure we will do something about it.

Q 126

Stephen Doughty: Just to follow up, if I may, you talked about the extra resources that you are planning to put into VOSA or that you are putting in already. Could you clarify your position on the suggestion that funds raised from the levy could be hypothecated specifically to VOSA, rather than going into the Consolidated Fund?

Stephen Hammond:  I can. With the exception of tolls that are raised against the debt for the provision of bridges, all moneys raised go into the Consolidated Fund. From the Consolidated Fund, that money is allocated across all activities of Government. One of those is roads, which includes road building and road maintenance, the activities of the Executive agencies of the Department for Transport—one of which, of course, is VOSA—and enforcement activities. Although we do not intend to hypothecate this money, I think you can be sure, as I said earlier, that we are making the necessary extra resources available to VOSA. The money that goes into road building and road maintenance is some hundreds of times ahead of the money that might be raised by the Bill over that period of time.

David Amess: Before we move on to Mr Bridgen, you will be delighted to know, Mr Connarty, that Mr Fitzpatrick took over your question and that it was answered.

Michael Connarty: As long as the Minister was left thinking about my question, that was all I was trying to do.

David Amess: He was.

Stephen Hammond:  It will be on the record, so Mr Connarty will be able to see the answer. I think he may be happy with it.

David Amess: Yes.

Q 127

Andrew Bridgen: Mr Connarty’s argument earlier was very long on compassion but rather short on common sense, and I am probably going to compound his misery by asking whether VOSA will be willing to liaise with third parties regarding foreign registered vehicles coming in or moving out of the country, such as with local authorities when there may be unpaid parking fines, or when there are unresolved insurance claims against vehicle users that have not given the correct details. With this implementation of the levy and the analysis of these foreign operators, will VOSA be able to liaise with third parties to ensure that foreign lorry drivers in this country pay their dues?

Stephen Hammond:  My answer, Mr Bridgen, is that I am keen to get this Bill on to the statute book and to get its provisions working well. In the future that may be possible by using the database that is going be generated, but it is important at this stage that we concentrate VOSA activities on exactly what we are doing regarding roadworthiness and road safety—and, of course, this Bill. However, I take your point.

Q 128

Julie Hilling: I want to go back to some of the questions about VOSA resources. One of the things that has been raised a number of times on the Transport Committee is cuts to the VOSA budget. Will the Minister talk to us about what cuts there have been, and also what extra resources are going to be put in? I have some concerns about VOSA’s ability to enforce this properly, given its resources, in terms of people and equipment.

Stephen Hammond:  VOSA has an overall budget of around £40 million. Its budget around some specific enforcement activities was going to be frozen, but we have ensured that it will rise, meaning that in the year 2012-13, when where there would have been £1 million decrease, the budget will not be decreased—it will be £17 million. In the years 2013-14 and 2014-15, the budget will be £17.5 million.

Q 129

Julie Hilling: How much was the cut from the budget in 2010?

Stephen Hammond:  I will have to get back to you on that; I do not have the figure to hand.

Q 130

Julie Hilling: Has that sort of capacity been reduced over time?

David Amess: Perhaps officials could answer that.

Neil Barlow:  There have been small reductions in the enforcement budget provided to VOSA. The key is that that is not our only source of funding. We also have funding for enforcement through fees, so you have to look at the combined figure. In terms of what VOSA has been doing, while those reductions have been happening—I think that the reduction over the past few years has been in the order of a few million—we have tried to maintain our effort on front-line activities, and we will continue to do so.

Q 131

Julie Hilling: There is no question of VOSA’s commitment, or the commitment of its employees, but you talk about “small reductions” and then you then cite several million. I am trying to get a grip of how much there was and then to see how that balances, given that we are asking VOSA to do more enforcement.

Neil Barlow:  The key thing is that, going forward, there will be a specific piece of funding identified for doing this work. There may have been changes in the funding to do our mainstream work, but this will be funding above our mainstream road safety work that is allocated for doing levy work. In terms of the details of the figures of the past three years, I do not have them absolutely in front of me, but I think it is fair to say that there have been reductions in that funding.

Stephen Hammond:  Mr Amess, if it is helpful, I am happy to write to the Committee and provide those figures.

David Amess: Thank you.

Q 132

Marcus Jones: We have not really had any representations today from witnesses from the smallest type of companies that may be affected by the proposals, such as owner-drivers. What consideration has been given to how the policy may affect small businesses, which may be sole traders? Also, what consideration has been given to people who are not necessarily members of organisations such as the Freight Transport Association and those who may not read the trade press? How are they going to be made aware of the changes?

Stephen Hammond:  On your first point about whether small businesses have had the chance to contribute, I guess that they have, in the way that anybody has any chance to contribute to any consultation. I do not think that we specifically went out to every haulier in the country that may have a vehicle but, none the less, there was a consultation period. If, following our Committee stage, the Bill passes Third Reading and then passes into law, the usual announcements will be put on the Department’s website, VOSA’s website and others so that people are informed. There will also be the usual process of ensuring that people know that the law has been changed.

Q 133

Pamela Nash: Minister, in your earlier answer to the shadow Minister about the situation with the border in Ireland, you mentioned that some rural roads might be exempt from the levy. Do you not worry that that might mean that HGVs are more likely to use those roads? Are we therefore just moving traffic— moving a problem—and causing excess damage on those roads?

Stephen Hammond:  As I said in response to the shadow Minister, we are in discussion with the Irish Government about which of those roads, if any, that would happen on. Clearly, I would want to ensure as much as possible that there is no dispersal. I recognise that if we exempt one rural road, a lot of farmers are affected, for example, and it is almost certain that someone will try to use that for dispersal. However, we are in discussions with the Irish Government. We will identify the roads where that is least likely to happen. It is not yet clear whether we will go down the road of the exemption, but we are in discussions. I cannot really give you any greater detail at the moment.

Q 134

Pamela Nash: Just to be clear, is the only reason for making a road exempt the problem with enforcing the levy on that road?

Stephen Hammond:  The Irish Government have made a plea to us to look at some specific cases where the road weaves back and forth across the border between Northern Ireland and southern Ireland. We have agreed to enter into discussions about whether it may be sensible to exempt some of those roads, because you might cross the border three or four times in a working day. There is no intention to have a general exemption for Northern Ireland. As I said, those discussions are ongoing, and I am happy to make all the details available to the Committee as soon as they are finalised.

Q 135

Pamela Nash: Are the Northern Ireland Executive involved in those discussions, or are they between only the British and Irish Governments?

Stephen Hammond:  I am sure that we will have some conversations with the Northern Ireland Executive during the process, but it is the Irish Government who have written to the Department for Transport.

Q 136

Ian Mearns: With reference to the earlier question from Mr Jones about the levels of consultation, while we had representatives from the Freight Transport Association and the Road Haulage Association here earlier, have you put any feelers out to the likes of the Federation of Small Businesses, for instance, to see if there are small-scale operators among its membership that might be consulted?

Stephen Hammond:  My official has chapter and verse on that.

Simon Chapman:  Thank you, Minister. Just before the debate on the Bill in November, I contacted the Federation of Small Businesses, the British Chambers of Commerce, the CBI and a whole raft of stakeholders with a tangential interest in the HGV levy. The FSB, in particular, was broadly supportive of the levy proposals.
To follow up on the Minister’s earlier point, the whole idea of the levy is that it should not really impact on HGV operators at all, whether they are big or small, in that the levy payment should be part of the VED payment each year or every six months.

Q 137

Ian Mearns: The point that I am getting to is: did the FSB, for instance, let you know whether it had among its membership small-scale haulage contractors? It is all very well the FSB being broadly in agreement with the proposals, but if it does not have any or many small-scale haulage contractors among its members, it is difficult to gauge the impact on or the feeling of those contractors.

Simon Chapman:  I imagine that the British Chambers of Commerce and the Federation of Small Businesses will have that stakeholder community between them.

Ian Mearns: I suppose the point that I am making is that it would be good to find out.

Q 138

Marcus Jones: We have talked a lot about the issues when we do not have firm border control in Northern Ireland and about the boundary of Northern and southern Ireland. Bearing in mind that this policy will be introduced in 2014, has any consideration been given to the question about independence that will be put to the people of Scotland? Will there be any discussion about this with the Scottish Executive?

Stephen Hammond:  We have had discussions with the Scottish Executive. They understand the motive and intentions behind the Bill. We did not want a legislative consent motion. My understanding is that they are broadly supportive of the Bill.

Q 139

Michael Connarty: Returning to common sense with compassion to get the Bill right, I am curious about what happens if someone has paid a levy before coming into the country, but then for some reason wishes to stay on, such as if their vehicle breaks down and is in a garage. Will they have the ability to top up online, as you can with the congestion charge in London?

Stephen Hammond:  They will be able to do that either online or by telephone.

Q 140

Michael Connarty: It is important that people can do that, and it is a simple matter.
May I pursue the question of how VOSA anticipates that this should be policed? I see that there are powers to stop and so on, but that is clearly a very random matter. We heard some strong evidence that the concentration should be around the points of access and departure, and that there should be some way to try to catch all the vehicles in that environment. Is it anticipated that that will be done? I ask that because I spent two periods with the police parliamentary scheme during which I saw the difficulty of even tracing lorries carrying drugs or illegal immigrants at both continental ports and our own ports. How will this be as secure as possible so that the maximum number of vehicles is controlled and the levy is paid?

Stephen Hammond:  There will be continued enforcement, as we have said, using the network of automatic number plate recognition camera sites across the strategic road network. When I asked about this, I got the answer I expected: VOSA will have cameras facing both in and out of the country. Perhaps one of the key illustrations is what it does at Ashford, which is one of its key sites. That is 15 minutes from Dover port and 10 minutes from the channel tunnel. That site enables traffic travelling both to and from the border to be targeted, so it is a key VOSA target enforcement site. VOSA will be using similar sites around the country, as well as having its cameras on the network.

Q 141

Andrew Bridgen: Just to come back on Mr Mearns’ comment about the FSB, I put it to the Committee that there will be many members of the FSB who will be hauliers but who do not class themselves as hauliers. They are companies who have vehicles to move their own goods and do not work for hire and reward. Many of them do not class themselves as hauliers, but operate goods vehicles. My question to the Minister is: is there a system for a situation where a foreign-registered vehicle enters the country but never leaves, whether due to catastrophic breakdown, scrapping or, indeed, an accident? Have you thought about how that will be organised, because that will happen.

Stephen Hammond:  Perhaps my colleague has something to add?

Neil Barlow:  I think the key thing is that we will enforce the vehicle when it is on the road. You are right that there will end up being a mismatch between the information from the UK Border Agency which will show that a vehicle came in but never went out, but the key thing is that we will enforce when we see it on the road. So if it is no longer on the road, we would no longer enforce it.

Q 142

Andrew Bridgen: Would it not be useful if there was an obligation on the operator to inform you that the vehicle will not be leaving because it has been scrapped?

Neil Barlow:  Potentially. In practice, this is something that does not happen very often, I guess.

Stephen Hammond: You are right that it may not happen often, but it is an interesting point. I will take that away and reflect on how we might—

Q 143

Andrew Bridgen: I would not want VOSA running around looking for vehicles are in the scrap yard, or wherever.

Stephen Hammond:  I think that they probably have enough to do without that.

Q 144

Julie Hilling: Can I clarify what is going to happen? Are vehicles going to be physically checked in and out? At that point, is there any ability to stop a vehicle leaving if it has outstanding fines or payments?

Stephen Hammond:  As a vehicle comes into this country, that information gets fed through to Ashford, and as it travels around the strategic road network and other places, it will be caught on the cameras and stopped if it has not paid the levy. If, on the way out, it has not been stopped, it will be stopped at the port.

Q 145

Julie Hilling: The thing that I think we are all struggling with a little is that once you are on the road network, taking A roads and roads where VOSA are not sitting at the roadside, it is a bit hit and miss as to whether you will get stopped. So a vehicle can leave the port without being stopped, but will a vehicle be able to leave the country without being stopped?

Neil Barlow:  To go quickly through the process that we will adopt, the majority of our high-volume sites are relatively near the ports. We work in some ports, but there are practical constraints because ports tend to be small locations where vehicles move through quickly. If you take the south-east of England as an example, we work within Dover and at Ashford, and Ashford is our higher-volume site. If a vehicle on its way in got past Ashford—potentially, it could in traffic—there is every likelihood that we would pick it up on the way out or, equally, we could pick it up at Dover. We will not be religiously stopping every vehicle on the way out, but, because of the position of our resources, we stand a very good chance of intercepting vehicles either on the way in or—better still, to some extent—on the way out.

Q 146

Julie Hilling: Then if a vehicle has come in and gone out and not paid any fines, is there an ability to stop it at the port before it goes off to do its next round of deliveries?

Neil Barlow:  Stop it when it is on its way out?

Q 147

Julie Hilling: No, it has been in and out. It has gone home, and now it has come back in again, and it has not paid—

Neil Barlow:  Certainly, previous evidence of not having paid the levy would be a reason for us to stop a vehicle for a variety of checks, including whether it is paying the levy again at that point, or a variety of other possible offences that may be carried out.

Q 148

Julie Hilling: What you are saying is that there is still a bit of hit and miss as to whether it is stopped, because you are not checking at the port?

Neil Barlow:  We would have a record that the vehicle has committed an offence. Whether we can always stop 100% of vehicles that commit an offence, I suspect not—not 100%.

Q 149

Julie Hilling: One of the other questions that one of the witnesses asked this morning was on whether there would be an option for vehicles to pay when they arrive in the country. Will there be the ability to do that?

Stephen Hammond:  They can pay on the ferry or, when they arrive, they can either immediately stop the vehicle at the port and phone—as I said in answer to the previous question—or they could go on to the website in the UK as they enter. They will be able to do that on the ferry or by those two methods immediately after they enter the port.

Q 150

Jackie Doyle-Price: As the Minister well knows, I have a close interest in port affairs and specifically security. It is impressive to see the ANPR systems around our ports in operation and the speed at which they can process information and highlight those vehicles that might be in breach. That brings me to the thrust of my question. What more can be achieved by VOSA having more resource at ports? It strikes me that VOSA is already responsible for enforcing against foreign vehicles that are not roadworthy. Do you anticipate that you will be able to get more bang for your buck in terms of having more resource at ports to enforce across the whole regulatory spectrum affecting lorries?

Stephen Hammond:  I will let VOSA answer that question.

Neil Barlow:  The slightly pedantic-sounding answer is that to enforce this we have got to see a vehicle being used on the road. That means in terms of incoming vehicles, if you take Dover as an example, at that point the vehicle will not have committed an offence. What it does enable us to do is pick up very good intelligence and equally advise that person that we know at that point that they have not paid. We have a check site 15 miles down the road and there is a target coming our way. I think there is a practical issue for more enforcement at ports for incoming traffic.

Q 151

Jackie Doyle-Price: Right. Presumably you anticipate more activity on the way out than on entry.

Neil Barlow:  Yes.

Q 152

Jackie Doyle-Price: In terms of working with other agencies, have you had any discussions with port police services in this regard, because they run these systems?

Neil Barlow:  The primary conversations we have had up to now have been with UKBA, but that is another route we may go down. Certainly, UKBA has an excellent data set available of heavy vehicles that are entering and exiting the country, which will be key to this enforcement.

Jackie Doyle-Price: The Minister knows I never miss an opportunity to plug the excellent work our port police do.

Q 153

Ian Mearns: I am wondering about the issue of picking up an individual vehicle, but also thinking about that in terms of who the operator is and how many vehicles it may have. If I were that way inclined and had a dozen vehicles that were making only occasional visits to this country from Belgium or somewhere, I would rotate the vehicles in order to cut down on the number of times that an individual vehicle was snapped and captured, as it were. What would you do in that instance to try to pin down the fees that are not being paid by a particular operator?

Stephen Hammond:  I cannot remember which witness it was this morning who said that, given the level of fines and the levy, they expect 90% of the people who come in will be law-abiding and would want to fit with it. He said that 10% will try it on, some will then realise that it is not worth while, and some of it will be fraudulent. In your case, notwithstanding the point that we will not pick 100% of every vehicle, it is highly likely that each time that vehicle comes in it will be subject to levy and therefore to a fine. There is nothing we can do to stop people rotating lorries like that. What we must do is ensure that each time that lorry from that operator comes in to the UK it has paid the levy. That is the intent of the Bill.

Q 154

Andrew Bridgen: Does VOSA intend to liaise with ferry operators and tunnel operators to get advance notice of registration numbers of foreign vehicles coming into the country? I am particularly thinking about those rogue operators who are not going to pay the levy. They have been in the country and they are not going to pay the levy this time. They are just coming in on the ferry again. It would be rather nice if you were to know in advance that they were coming again so that you could have a welcome party for them. Is it VOSA’s belief—as I suppose it is probably mine—that those foreign operators who would not pay the levy are also highly likely to be in breach of the condition of their vehicle and driver hours, and it will be especially interested in having a word with them?

Stephen Hammond:  The simple answer to your question is yes. VOSA does intend to have that sort of discussion, so that the welcome party can be arranged as and when they break UK law, as and when they are warned when they arrive on UK soil.

Q 155

Michael Connarty: Just to remain on the enforcement question, do we intend that fines will always be paid in this country? We had some debate on Second Reading about whether we would require the assistance of law enforcement agencies in other parts of the EU to ensure that fines were paid if they were not paid here. If someone who has an outstanding fine is stopped here, the vehicle will be impounded until they pay the fine. However, someone might run up quite a few fines on a few different lorries and simply not pay them, and those particular lorries might not come back into the country. How does VOSA pursue someone who may owe £25,000 or £30,000 if they are not in the UK?

Karen Farr:  We ask for a deposit payment from them at the time, so we issue them with a fixed penalty and ask them to pay that amount. We do not allow them to leave until that is paid, so there could not really be an occasion where operators are accruing fines without paying them, because we do not allow the vehicle to leave until the fine is paid.

Q 156

Michael Connarty: But what happens if they leave the country? You are assuming that you catch everyone going out who has not paid the levy. If they have left and you realise that the vehicle was in country without having paid the levy, you would seek to make the operator pay the fine if the vehicle came back in. If they sent different lorries in at different times, they could accumulate quite a large debt to VOSA across a number of vehicles. You could not really stop the next vehicle belonging to that owner coming in, and say, “You must pay the fine or we will not let this lorry in.”

Stephen Hammond:  You are pointing to a possible but relatively or even highly unlikely scenario. In that scenario, every lorry owned by this mythical operator comes into the UK, fails to pay the levy, is undetected for the whole of its time in the UK and is undetected on its way out. The next lorry of this mythical operator, which also chooses not to pay the levy, would also be undetected. Although in theory what you say is possible, the Bill stipulates that the levy is against the vehicle, so we could not pursue the operator. Although I accept that that may be a failing, I suggest that in reality it is highly unlikely that that would happen.

Michael Connarty: I accept that it is unlikely, but it is possible. I can think of a scenario where people next to me were stealing charity bags full of clothes, and they were later found in a warehouse in London with £1 million of clothing. It is amazing what criminals will get up to in order to break the law and make money, so we cannot think that people will not think of making money out of running lorries containing all sorts of merchandise into the country.

Q 157

Andrew Bridgen: Following on from Mr Connarty’s doomsday scenario, is the Minister saying that if a vehicle operated by a foreign haulier has come into the UK, not paid a levy and left, the next time the same operator sends a vehicle in, even if it has paid the levy on that vehicle, we cannot impound it and back-charge the fine on the previous vehicle?

Stephen Hammond:  No, we cannot. That is not the intent of this Bill.

Q 158

Andrew Bridgen: Why not?

Stephen Hammond:  Because if we were to go down that line, we would have to be absolutely certain that we could take action against the operator or the owner of that vehicle in its resident domicile and that they would not just say, “Take the lorry.” In practice, it is extremely difficult to enforce against someone who is intent on such criminality.

David Amess: Under Standing Order No. 83C (11), I have the discretion to allow the questioning of the last group of witnesses at an afternoon sitting to continue for a further 15 minutes, so we can continue until 4.45 pm. We do not have to use up the remaining 15 minutes, however, particularly as there is likely to be another vote.

Q 159

Julie Hilling: May I ask some questions about process?
One of the previous witnesses said that they wanted a rolling start, in terms of when they renew their excise duty. Is that going to be the case, or will the scheme start on a set date, and if so, can you confirm absolutely what that set date will be?

Stephen Hammond:  The intention is that the scheme will start in April 2014.

Q 160

Julie Hilling: It will start for everybody at that point?

Stephen Hammond:  Correct.

Julie Hilling: On the nature and the cost of the contracts—

Stephen Hammond:  Let me clarify what I just said, as I think I may have inadvertently misled you, and indeed myself. The scheme will be introduced simultaneously in April 2014. As we go through that year and people renew their VEDs, it will then affect them. We intend to start from 2014, rolling forward.

Q 161

Julie Hilling: It will be a rolling programme?

Stephen Hammond:  Yes. I apologise.

Q 162

Julie Hilling: Thank you. Can you tell us a little more about the nature and the cost of the contract to be awarded to a third party contractor to maintain the electronic database?

Stephen Hammond:  We will go out to procurement, following the normal Government procurement rules, to find a contractor to construct and maintain a database. That database will then sit behind the automatic number plate recognition system and combine with that to provide the intelligence. One of the aspirations and intentions is that there will be a live feed to VOSA as well, which will indicate that a vehicle is committing an offence as it is shown on that. We will start the procurement process as and when the Bill passes through the House of Commons. The total cost of the set-up, including the procurement for that database, will be, depending on various factors, somewhere between £3 million and £6 million.

Q 163

Julie Hilling: How much money is expected to be drawn down, then, in the first three years of the scheme—the first year and then subsequently?

Stephen Hammond:  How much is the revenue?

Julie Hilling: Yes.

Stephen Hammond:  I think we made clear on Second Reading that our estimate of net revenue is somewhere between £18.7 million and £23.2 million per annum.

Q 164

Andrew Bridgen: I commend the Minister for choosing a rolling start for the system in April 2014 for UK hauliers, because it would otherwise prove a huge administrative burden on the industry, which would defeat the whole aim of the measure. Can you assure the Committee that it will be a hard start for foreign hauliers, because there is no system in place there at all, so they will all be starting in April 2014?

Stephen Hammond:  Yes.

Andrew Bridgen: Thank you.

Q 165

Julie Hilling: One of the other things that the hauliers said to us is that the notion of a 12-tonne vehicle is quite alien in the UK. Do you see there being any difficulties in identifying which vehicles are 12-tonne vehicles? Is that the appropriate cut-off point? Will there be any difficulty with grades on either side of that point?

Stephen Hammond:  I recognise that it is not the usual UK standard. However, it is a standard that is widely recognised in the EU. One of the reasons why we looked at it was so that we can charge EU vehicles. All the advice I have at the moment is to the effect that we should not anticipate any issues with that.

Q 166

Julie Hilling: There will not be shades of grey over whether vehicles are in or out?

Stephen Hammond:  No; certainly not 50 shades of grey.

David Amess: Colleagues, I sense that there are no further questions for the Minister. There is about to be a vote in the House, and we cannot come back afterwards in any case. On behalf of the Committee, I thank you, Minister, and your officials for the evidence you have presented to the Committee this afternoon. Although we will be seeing you again, I would also like to wish you all a very merry Christmas. The Committee will sit again at 11.30 am on Thursday, in Committee Room 12.

Ordered, That further consideration be now adjourned. —(Nicky Morgan.)

Adjourned till Thursday 6 December at half-past Eleven o’clock.